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CHARITABLE TRUSTS BILL 1993
NEW SOUTH WALES
EXPLANATORY NOTE
(This Explanatory Note relates to this Bill as introduced into Parliament)
The objects of this Bill are:
(a) to clarify, and to some degree extend, the jurisdiction of the Supreme Court
with respect to the protection of charitable property; and
(b) to extend the circumstances m which the original purposes of a charitable trust
fail and those purposes can be altered to allow the trust property to be applied
cy pres (i.e. for similar purposes); and
(c) to enable the Attorney General (as well as the Supreme Court) to establish
schemes for the administration of charitable trusts, including cy pres schemes;
and
(d) to consolidate existing statutory provisions relating to charitable trusts; and
(e) to make other minor amendments to the law relating to charitable trusts.
PART 1--PRELIMINARY
Short title and commencement
Clauses 1 and 2 specify the short title of the proposed Act and provide for its
commencement on a proclaimed day or days.
Definitions
Clause 3 defines certain expressions for the purposes `of the proposed Act. In
particular:
"Charitable trust" is defined to mean a trust for purposes recognised by law as
charitable. The definition provides for the exclusion of charitable trusts which are
not subject to the control of the Court, e.g. a charitable trust established by an Act
and subject to the control of a Minister (see Construction Industry Training Board
v. Attorney General [1973] Ch. 173).
"Court" is defined to mean the Supreme Court of New South Wales.
Clause 4 ensures that the proposed Act applies in respect of a charitable trust even
though it was established outside New South Wales, or the property of the trust is not
situated in New South Wales or the trustees of the trust are not domiciled or resident in
New South Wales. The clause also ensures that the proposed Act applies to trusts
created before as well as after the commencement of the proposed Act.
The proposed Act will not exclude the operation of other Acts relating to charitable
trusts (e.g. Acts which specifically authorise the variation of trusts on which Church
property is held).
PART 2--PROTECTION OF CHARITABLE PROPERTY
Taking of certain proceedings to be authorised by Attorney General
Section 17 of the Imperial Acts Application Act 1969 is being repealed by clause 27
and clause 6 re-enacts (with modifications) the provisions of that section that are not
obsolete. The section is itself a re-enactment of Sir Samuel Romilly's Act (Imp.) which
provided, when it was introduced in 1812, a simplified summary procedure by way of
petition for proceedings involving the administration of a charitable trust and required
such proceedings to be authorised by the Attorney General. As a result of the
introduction, by the Supreme Court Act 1970, of uniform and simplified procedures for
all proceedings in the Supreme Court, section 17 of the Imperial Acts Application Act
1969 has, .except
with respect to the authorisation of the Attorney General, been
superseded by the Supreme Court Rules 1970 (see Division 11 of Part 77).
The remaining requirement of Sir Samuel Romilly's Act which is being re-enacted in
this clause is the requirement that proceedings involving the administration of a
charitable trust must be authorised by the Attorney General (or by leave of the Court if
the authority of the Attorney General is refused). This requirement is being retained to
protect charitable trusts from costly legal proceedings which may dissipate their funds.
Clause 6 is similar to section 28 of the U.K. Charities Act 1960 but dots not restrict the
persons who may bring charitable trust proceedings to those "interested in" the
charitable trust. This
is criticised in Halsbury's Laws of England as unclear
(see Vol. 5 4th ed. at para. 923). Clause 6 (3) provides that, if the Attorney General
authorises trust proceedings, the plaintiff will no longer be required to establish that the
proceedings affect the plaintiff's legal rights
order to have standing to bring the
proceedings. By clause 6 (4), the power of the Attorney General to bring charitable trust
proceedings with or without a relator is preserved.
Clause 5 defines the charitable proceedings concerned, and makes it clear that they
do not include proceedings on appeal or proceedings relating to the construction of a
trust instrument (e.g. whether a will creates a valid charitable trust).
Extension of powers of Court to protect charitable property
Clauses 7 and 8 are intended to clarify and make specific the powers of the Court to
deal with misconduct or mismanagement in the administration of a charitable trust.
Generally those powers include:
· the removal of trustees and others involved in the affairs of a charitable trust;
· restrictions on dealings in trust property; and
· the appointment of a receiver.
PART 3--APPLICATION OF CHARITABLE PROPERTY CY PRES
Extension of the occasions for applying trust property cy pres
Clause 9 extends the circumstances in which the original purposes of a charitable
trust fail and the trust property can be applied cy pres i.e. for a similar purpose. The
circumstances are to extend to trusts whose original purposes have ceased to provide a
suitable and effective method of using the trust property having regard to the spirit of
the trust. A similar extension has been made in other States.
Requirement for general charitable intention
Clause 10 preserves the requirement of the existing law that charitable property
cannot be applied cy pres if it was given only for the purpose of the trust and without
any general charitable intention. However, the clause creates a presumption in favour of
a general charitable intention.
The presumption was recommended by the Legal and Constitutional Committee of
the Victorian Parliament in its report on charitable trusts of May 1989.
Duty of trustee to secure application of trust property cy pres
Clause 11 is being enacted to declare the duties of trustees of a charitable trust if the
original purposes of a charitable trust fail. The duty to apply trust property cy pres was
first stated in the National Anti-Vivisection Case (see National Anti-Vivisection Society
v. Inland Revenue Commissioners [1948] A.C. at p. 74.) The clause is in the same terms
as section 13 (5) of the U.K. Charities Act 1960 and section 2 (4) of the Charities Act
1978 of Victoria.
PART 4--SCHEMES BY ATTORNEY GENERAL FOR ADMINISTRATION
OF CHARITABLE TRUSTS
Attorney General may establish schemes
Clause 12 authorises the Attorney General to establish a scheme for the
administration of a charitable trust in certain limited cases so as to avoid the necessity
for the trustees of the trust to approach the courts. Such a scheme may, among other
things:
(a) authorise the application of charitable property cy pres on a failure of the
purposes for which it was given; or
(b) authorise the application of charitable property for specific charitable purposes
where property is given for a general charitable purpose; or
(c) extend or vary the powers of the trustees of a charitable trust.
Clause 13 authorises the Attorney General to establish a scheme on application by a
trustee, on the Attorney General's own initiative (in special cases) or on referral by the
Supreme Court.
Clause 14 imposes restrictions on the exercise by the Attorney General of the power
to establish schemes. A scheme cannot be established if the value of the trust property
affected by the proposed scheme is more than $500,000 or such other amount as is
prescribed by the regulations. Nor can a scheme be established if the Attorney General
considers that there are good reasons why the matter would be better dealt with by the
Court. These restrictions do not apply to a referral by the Court.
Publicity for schemes established by Attorney General
Clause 15 requires an intended scheme (except in certain circumstances) to be
publicised and public comment to be invited, and requires the Attorney General to
consider representations and suggestions made by any person in relation to the matter.
Publication and commencement of schemes
Clause 16 deals with the due publication and commencement of schemes that are
settled by the Attorney General.
Revocation or variation of schemes
Clause 17 enables a scheme to be revoked or varied in the same manner as that in
which it may be made.
Appeal from order of Attorney General
Clause 18 provides an appeal to the Court against an order of the Attorney General
that would establish, revoke or vary a scheme.
Register of orders of Attorney General
Clause 19 requires the Attorney General to maintain a public register of orders made
the Attorney General.
Immunity of Attorney General
Clause 20 affords the Attorney General, in respect of the establishment, variation or
revocation of a scheme under this Part, the same immunities as a Judge of the Court
would have if the scheme had been dealt with by the Court.
Fees payable to Attorney General
Clause 21 authorises the Attorney General to charge fees for the costs and expenses
incurred in establishing or varying a scheme.
Determination of value of trust property
Clause 22 authorises the Attorney General to determine the value of trust property
for the purposes of provisions of the Part that depend on the value of the trust property
concerned.
Inclusion of non-charitable purpose not to invalidate trust
Clause 23 re-enacts without modification the provisions of section 37D of the
Conveyancing Act 1919, which was inserted into that Act by section 3 of the
Conveyancing, Trustee and Probate (Amendment) Act 1938, in order that trusts which
included charitable and non-charitable purposes were not invalidated but construed as
trusts for the charitable purposes only. The clause preserves the requirement that the
provisions of section 37D do not apply to trusts declared, or the wills of testators dying,
before the commencement of the 1938 amending Act. The repeal of section 37D of the
Conveyancing Act 1919 is effected by clause 27.
Act binds the Crown
Clause 24 declares that the proposed Act binds the Crown.
Regulations
Clause 25 confers a general regulation-making power on the Governor-in-Council.
Saving of pending court proceedings
Clause 26 saves pending court proceedings.
Consequential repeals
Clause 27 repeals provisions of other Acts that are to be replaced by the proposed
Act.
Review
Clause 28 requires the proposed Act to be reviewed within 5 years of its assent.